An Alternative View of Funding for Innovation

The real tectonic change of the last 20-30 years in my opinion is the speed of innovation that software gives you over any other technology domain. Whatever the gadget or concept, if you can add software to it, you can speed up innovation by a major factor. The reason for this is that software can be modified and brought to market within seconds, rather than weeks or months. This is the result of the last ten years of development of “continuous delivery”.

As one venture capitalist put it, “software is eating the world”. By this he meant a couple of things. One is my argument about innovation above: Things speed up with software in the mix, creating innovation and entrepreneurial opportunity faster bigger cheaper. This snippet also implies that software itself opens up new domains, not just “augmented reality”, i.e. an extension of the physical into the virtual, but also “virtual reality”, i.e. the virtual all by itself. Make a guess where office work-life will take place more prominently in the future?

From a public policy and funding perspective then, we need to recognize the particular position of software in the innovation mix. It is both an enabler of existing domains and its very own domain. While established industries may not like to hear it, the action in their domains will be with how software takes it to the next level, wrestling control away from those bending metal to those who write the software which manages it. Innovation and outsize investment returns will be 2-3 levels removed from primary physical production artifacts.

General Electric already declared itself to be “a software company”, recognizing the importance of this shift of focus. Where is German industry?